A Tale of Two States

By Richard Stengel

In many ways, they are the yin and yang of the American experience, poles of the national character. One is "back East," a little overbred and intellectual for a Texan's taste. The other is "out West," big and rough and physical. Massachusetts evokes Calvinism and Brahmins and John Kennedy. Texas is the fenceless dreamland of American individualism, where the native exuberance went to herd cows and sling guns and strike oil. It means Giant, Lyndon Johnson and everything bigger and louder than it ought to be.

The destinies of the two states sometimes worked in counterpoint, almost seemed to leapfrog each other. In the 1970s, for example, Massachusetts appeared to be threadbare and obsolete, a ghost town of the Industrial Revolution, its people shivering through the winters of the oil shortage. Texas boomed with energy--the kind it pumped out of the Permian Basin and the kind that came from its adrenal glands. Now it is Texas that is chastened and Massachusetts that seems, for the moment, to belong to the future. Two reports:

MASSACHUSETTS

Back in the Vanguard

Massachusetts has always been ahead of its time. The Pilgrims of Plymouth engendered an idea and a commonwealth. The Minutemen of Lexington and Concord triggered a revolution and a republic. High-minded, contrary and steadfastly liberal, Massachusetts either led the parade or refused to march. It is the cradle not only of liberty but of imagination: John Harvard conceived of a college; Emerson and Thoreau inspired the intellectual flowering of New England; William Lloyd Garrison sparked the abolitionist movement that split a country. The state's hybrid heritage--Puritan and Pilgrim, fisherman and farmer, Yankee and immigrant--combined to form something greater than the sum of its individual strains.

Economically, Massachusetts seemed to be the first to benefit from good times or bruise from bad. Watching the Bay State's skyline was a way of marking the economic evolution of a nation: the graceful masts of 18th century sailing ships gave way to the red brick smokestacks of 19th century textile mills, which in turn made way for the steel-and-glass towers of 20th century corporate power.

Only a decade ago, however, Massachusetts was moribund, the archetypal Frost Belt state frozen in a dead-end past. Its jobless rate was higher than any other industrial state's; plant closings and layoffs were epidemic; deficits deepened. Textile mills and shoe factories became abandoned shells, their great machines rusting. Taxachusetts became the state's unofficial nickname, and businesses, feeling oppressed by heavy levies, were clearing out for more hospitable climates.

Yet today Massachusetts is again in the vanguard, the very model of the high-tech state. It has the lowest unemployment of any industrial state: 4%. In the windows of supermarkets, pharmacies and fast-food restaurants, handwritten HELP WANTED signs beckon. Per capita personal-income growth (7.8%) is the highest in the nation for the second year in a row. Over the past two years, nearly 50,000 new businesses have come to life, creating 160,000 jobs. More than 25,000 have gone to former welfare recipients, causing the largest welfare-roll decline of any state. While population climbed only about 1% between 1975 and 1985, jobs increased by more than 28%. The treasury, saddled with a $500 million deficit as recently as 1975, now has a surplus of $575 million, allowing Democratic Governor Michael Dukakis to make the largest tax cut in the state's history.

Leaders across the country are gazing enviously at Massachusetts and wondering how a stagnant industrial state transformed itself into a silicon- fueled go-go state that is leading the transition to what economists see as the country's future--a high-tech, service-oriented economy.

Like a computer designer who must integrate different components to create a new machine, Massachusetts combined its unique assets into a dynamic mix. The elements include a wealth of academic brainpower and talent, defense dollars and venture-capital money, and a state government and Governor willing to pull out all the stops to stimulate growth. Says Robert Reich, the Harvard School of Government's guru of the new industrialism: "Massachusetts is riding all the waves of the future that other states and cities are trying to emulate."

During the mid-1970s, when the state and nation were in a recession, the blips of change--in integrated circuits and microchips--could be heard in Massachusetts laboratories and boardrooms. At Harvard and M.I.T., young engineers in white shirts and skinny ties were booting up the brave new world of computers. Aided by money from venture capitalists (only California ranks ahead of Massachusetts in the supply of seed money), engineers were inventing the future in the form of new companies, miniature versions of such pioneers as Digital, Wang, Honeywell, Data General. Like sand crabs, which make homes in empty shells, some of these nascent high-tech companies were rehabilitating old mills and setting up shop in them. Others shaped their own world on the highway of high tech, Route 128. Their success drove the economy. From 1976 to 1984, more than half a million jobs were created in the state, a quarter of which were generated by high-tech companies. By 1984 the service sector was the state's largest employer, and the percentage of workers in the service sector was the highest in the country.

When Dukakis was first elected Governor in 1974, the buttoned-up, some-what didactic liberal seemed to regard business as his natural adversary. He raised taxes when antitax fervor was the spirit of the day. In the 1978 primary, the voters snubbed him for Ronald Reagan's "favorite Democrat," Edward King. In his rather stubborn way, King cut both state taxes and services. Dukakis, brooding and planning, watched and learned during his exile at the Harvard School of Government. In 1982 he challenged King, whose administration had been undermined by scandal, and defeated him.

Dukakis, Take Two, became a born-again business booster. If his administration has a motto, it is "Let's make a deal." Some of his aides could be mistaken for zealous venture capitalists, and they have fostered a symbiosis of the public and private sectors. Says Economic Affairs Secretary Joseph Alviani: "We act as a catalyst."

One of the tools with which the Dukakis administration promotes growth is the Massachusetts Industrial Finance Agency. During the past eight years, MIFA has signed some $3 billion in industrial development bonds and loan guarantees to 1,700 projects in the state, spurring the creation of 66,000 jobs. With $3 million of that money, for example, Integrated Genetics, a five-year-old biotechnology company based in Framingham, pioneered a rapid detection test for Salmonella and became a leader in the cloning of animal fertility hormones. Biotechnology is one of the five new technologies the state has singled out as vital for its future; the others are photovoltaics, microelectronics, polymer sciences and marine sciences. Centers of Excellence is what the administration calls its program to target and promote emerging technologies.

One target growth area is Myles Standish Industrial Park, just outside the once languishing city of Taunton, where the sounds of bulldozers and jackhammers never cease as high-tech companies set up their boxy, compact headquarters. GTE has decided to build a $21 million communications plant there to fulfill a multibillion-dollar military contract.

High tech can teach old industries new tricks. One example: United Merchants, an ossifying textile operation in Fall River unable to compete against cheap foreign imports. It drafted a plan for harnessing new technology, and the state provided $1.8 million in industrial revenue bonds. Now a $200,000 Kusters Desizing Range washes and steams raw cloth, which is then fed into a computer-controlled $1.25 million Montforts dyeing and finishing range that processes and colors 120 yds. per minute, double the old rate. The firm has rehired 70% of the workers it let go last January. Turning dull gray material into a rainbow of new fabrics--a metaphor for Massachusetts itself.

The Dukakis administration has received a great deal of attention for two programs known by the acronyms ET and REAP. Created in 1983, ET (for Employment & Training Choices) is a variant of workfare, complete with day care and transportation subsidies, a program designed to get the unemployed off welfare through intensive job training and placement. To date, 86% of ET's graduates are still working a year after placement, and some 8,000 Massachusetts firms employ ET graduates. Since ET's inception in October 1983, the state's welfare rolls have declined by 8.6%, the largest drop among industrial states.

REAP, the Revenue Enforcement and Protection Program, is the Dukakis administration's "no more Mr. Nice Guy" policy toward tax enforcement. The showpiece of the program was a temporary tax amnesty, which has brought in a windfall of $85 million. Because of ET and REAP, Dukakis has taken on a halo for many Democrats, and he is already being included among those trotted out as Democratic hopefuls for 1988.

The Department of Defense has done its part to fuel Massachusetts' revival. Bay State companies write the software programs for today's so-called smart weapons and build the hardware to run them. The economic forecasting firm Data Resources estimates that 16% of the state's growth from 1981 to 1988 will be the result of Pentagon spending. Massachusetts, the state usually described as the most liberal in the nation, currently ranks fourth among all states in the amount it receives in defense contracts: some $7.7 billion. In 1985 alone, $2.3 billion worth of defense-related business went to Raytheon, based in the Boston suburb of Lexington, where the shots heard round the world were fired. The ammunition they are firing today is more sophisticated: Patriot and Hawk air defense missiles for the Army, Sparrow air-to-air missiles for the Navy.

Jack Conners, founder of Boston's Hill Holiday advertising agency, explains the reason for Mass appeal. Hill Holiday has grown from $20 million in billings ten years ago to $245 million today, partly by telling consumers why computers will change their lives. "The politicians will take credit for it; the businessmen will take credit for it, but"--and here he points out the window of his 39th-floor office across the Charles River toward Harvard and M.I.T. --"the real key to it all is the universities."

There may be more brainpower per square foot in Massachusetts than in any other state. Within 200 miles of Boston, the Athens of America, are some 250 colleges. Half of the state's 2,000 yearly Ph.D.s remain there. Harvard and M.I.T. are intellectual nation-states that attract and breed talent. An informal estimate of the number of companies started by M.I.T. graduates easily reaches 1,000. Today, M.I.T.'s artificial intelligence laboratory is considered the prime incubator for this new technology, which economists estimate will become a billion-dollar industry by the end of the decade. "The selling of our wits," as M.I.T. Industrial Expert David Birch calls it, is a Massachusetts growth industry.

Sam Raymond, a mechanical engineer from M.I.T. and the founder of Benthos in North Falmouth, the world's leading maker of oceanographic equipment, suggests that Massachusetts has an equation for success. "There's a mother lode of talent in this state," says Raymond. "Combine that with the liberal ethic and you have a society that stimulates creativity." That is precisely what Governor Dukakis wants to accomplish: to make the state work "so that the extraordinary becomes a permanent fixture." For a state that has traditionally made the extraordinary ordinary, that should not be so hard a task. -- By Lance Morrow. Reported by David S. Jackson/Houston

TEXAS

Shadows on the Landscape

The sheepmen gathered at dusk outside the meeting hall in Mertzon, Texas. They wore cowboy hats (each hat distinctive, matching the weathered face) and belt buckles the size of a Roman's shield. They stood in dusty boots on the scrubby grass and drank strong black coffee out of plastic cups as the night came on. The ranchers bantered in the sidelong West Texas way, good-humored insult frisking and woofing just at the edges of the talk, like a sheepdog nipping at the fleecier pleasantries. But shadows moved across the landscape.

The men talked, shaking their heads, about the economic disaster in the oil fields, about drill rigs selling for the price of scrap metal in Midland, the glass-and-steel mirage of a city that oil money had built in boom times. The smaller wells, called strippers, would be closing down all over Texas, the ranchers thought, and would be too expensive to start up again when the oil bust is over. "Then the tent-makers will have it all," said one sheepman with an affable bigotry.

The collapse of oil had reverberated over the territory. Most of the ranchers lease land to the oil companies for drilling. Their royalty checks had shriveled. The startling fossil smell of oil, a reek of the inner earth uncorked, still blew in the air now and then, but many of the pump jacks that brought up the oil from the range, like blackbirds metronomically beaking the dust, were now motionless.

Things were coming up dry. The mesquite had its lovely light green springtime leafing--a touch of almost Japanese delicacy in a rough, dun- colored country--but mesquite is a thirsty parasite, a drinker with deep roots that steal water from the rest of the landscape. Mesquite is for grilling meats in Manhattan and Los Angeles. Livestock do not live on it. The range grass was sparse now among the limestone and caliche. The herds would need to be culled, the lambs taken off the ewes early and sold to save money on feed. It looked like a dusty summer coming. A rancher named E.L. Tankersley, descendant of the first cattleman to set up business in Tom Green County, killed his first rattlesnake of the season that week--small, but frisky: seven rattles.

The sheepmen drifted inside the hall and formed a line for the chicken- fried steak and corn on the cob and white bread that looked as if it had been cut in thick slices off a loaf of cotton. Everyone regretted that the West Texas Wool and Mohair Association was not serving its usual wonderful barbecue this year. Hell of a note, they agreed, mock rueful, as if this were the last straw in a bad year. Then they stood at the long tables and took off their hats and bowed their heads and prayed for rain.

Gandhi said that God can only appear to the hungry in the form of bread and butter. Historically, God has appeared to Texans in the form of rain, or of oil at a good price. This year it seems to many that the Lord, whose behavior toward Texas has ranged from lavish generosity to savage abandonment, has once again turned his attention elsewhere.

Texans have often announced their presence with a triumphal blare. They are doing that, elaborately, this year, the 150th anniversary of the founding of the Republic of Texas. Despite the bad economic news, or because of it, the sesquicentennial is being brought off with that peculiar Texas grandiosity that is redeemed by the note of acknowledged excess. Chauvinism and self- satirization are twinned in the Texas character.

Part of the official celebration, for example, involves the sale of $1,500 sperm samples from a bull that was born with a white marking in the shape of Texas on his forehead. The entire year is a procession of self- celebrations: 10,000 events in all. The celebration is a circus of superlatives--the world's largest rattlesnake roundup in Sweetwater, the world's largest high-tech chili pot, which once cooked 4,000 lbs. of meat for a San Antonio Independence Day rally. Prince Charles came to Austin to cut "the world's largest birthday cake."

For the moment, the good news is the past, which is being noisily cherished. The bad news is the present. The plunge in the posted price of West Texas intermediate crude from a 1980 high of more than $39 to about $13 last week has devastated the Texas oil business and shaken such towns as Beaumont and Odessa to their foundations. Big companies such as Diamond Shamrock and Tenneco have cut back their work forces to cope with the crisis. Smaller independent companies are going under.

The effect ripples through the entire economy. Convenience stores in the Panhandle report more shoplifting. Tommy Lindsey's furniture store in Borger has had a 50% drop in business in the past year. David Denbina was a vice president handling energy loans for InterFirst Bank in Dallas for nearly six years until he was laid off last fall. "Good grades and Phi Beta Kappa and summa cum laude don't mean anything when there aren't any jobs," he says.

Houston is the big city hardest hit. The town once giddily expansive on oil money has an unemployment rate of 9.2%. Brilliant new skyscrapers stand nearly empty. Loans in real estate and energy portfolios are going bad; hotels are all but deserted. That temple of Texas giantism, the Shamrock Hilton Hotel, with a pool so large you could water ski on it, has closed.

Depression in the energy industry has cut the state's expected tax revenues by $1.3 billion. Governor Mark White has asked for a 13% reduction in all state services--especially painful in a state that has never been generous in its help to the poor--and even 13% may not be enough. Every time the price of oil drops by $1 on the world market, 25,000 Texans are put out of work. The Texas civilian unemployment rate has now risen to 8.3%, vs. a national rate of 7.1%. The number of new applications for food stamps grew to 45,100 in March, up 9% over last year.

Revenues from oil have long saved Texans from a state income tax, thus reinforcing the Texan's self-image of individualism. "Oil was that big, hot flash of money that quickened the economy," says Historian T.R. Fehrenbach, "and we looked sort of self-righteously at other states as we went through the '70s without having to raise taxes." The absence of a state income tax is a cherished tradition unlikely to be changed soon. Texas will probably try to keep itself solvent by raising the sales tax and legalizing horse racing and a lottery.

The energy industry accounts for 20% of the gross state product, but farming represents almost as large a part of the Texas economy (19%). Texas farmers are in so much trouble that State Agriculture Commissioner Jim Hightower predicts that up to 20% of them will give up by the end of the year. The cattle business, one of the great themes of the Texas myth, has been struggling for a decade, in part because of public anxieties about chemicals in the feed and cholesterol in red meat.

Such rhythms of boom and bust are part of the mystique of Texas. Observes Historian Joe Frantz: "Texans are not like the Yankee who puts his money in the bank and collects compounded interest. We take risks. And when it doesn't pan out, we don't blame a man. Going broke is not an occasion for gloom. It just means you're short on cash." But as State Treasurer Ann Richards says, "This is the first time I know of that everything hit at once."

As part of the sesquicentennial, a wagon train has slowly been making its way around the state--some 40 mule-drawn and horse-drawn wagons escorted by horsemen. Its 3,000-mile progress, traversing a hugely diverse geography, dramatizes the complexity of Texas. The state cannot be contained in one image: the cowboy, or the oilman, say. Geographically, climatically, economically, sociologically, Texas is at least five different entities: 1) east Texas, with its piney woods and swamps and large black population, a territory like the Old South; 2) south Texas, with its enormous Hispanic population, a borderland as much Mexican as American; 3) West Texas, arid ranching and oil country with huge vistas and forbidding distances; 4) the Panhandle, high plains farming country like the Midwest; 5) central Texas, the hill country, physically the loveliest part of the state, its roads in springtime bordered with bright wildflowers.

Texas harbors surprises: Germans in the hill country, for example, still speaking in the accents that their forebears brought over in the 1840s. Says Robert Strauss, the Texan who is former chairman of the Democratic National Committee: "Texas is a montage of America. From the financial center of Dallas to the high-tech areas of Austin to the agricultural communities. It represents the sea and the mountains and the valleys, great wealth and pockets of poverty."

Texas is a complicated place psychologically. In one way, it is (improbably) like Japan: nearly everything that one can say about Texas can be countered by an opposite and equally true assertion. Not quite. If you say Texas is big, you cannot also say that Texas is small. But if you say Texas is historically glorious, you can equally say that Texas has been ugly and mean, a nest of fire ants and rattlesnakes and men somewhat worse. If you say it is heroic, you might also point out that Sam Houston, when he lived among the Cherokees, was known as Big Drunk. If you say Texas is rich, you can also say it is desperately poor and hardscrabble, and always has been. If you say it is ruggedly individualistic, you can also say it is meritlessly lucky to be built on top of a vast natural oil tank. If you say it is full of self-confident brag, you can also say it is terribly insecure (no contradiction, really). Texas has a sort of superiority-inferiority complex.

Texas is a state with strong flavors and themes and a peculiarly distinct identity. Arkansas celebrates its sesquicentennial this year, but with nothing like the noise of self-proclamation to which Texans are treating themselves. Why should that be? In part because Texas is the vestige of an independent nation. Texas proclaimed itself a republic, not a state, 150 years ago. The Texan's ancestral memory is strong. The state's highways are lined with historical markers, as well as with antilittering signs that sound just the right note of truculent nationalism: don't mess with texas. Texans cherish a sort of dual citizenship. They joke about it. Lone Star calls itself the national beer of Texas. It is hard to imagine a man from Chicago calling himself an Illinoisan in the way that a man from Dallas will call himself a Texan.

One of the charms of Texas is its inherent exaggeration of almost everything. Its weather runs to violent extremes. It is a rough joke to survive a drought of several years and then find the drought broken by torrential rains that can flood the town and wash away the pickup truck. Texas humor, like the Texas landscape, accommodates outrageous possibilities.

Texans may cling more tightly to the Texas myth as they sense the ground shifting under them. In many ways, the Texas myth and reality are going their separate ways. The state is gradually moving toward a service economy. For all the lore of cattle and oil, the action in Texas today is more likely to be found in medical research, in computer and space technology. "Texas society is changing profoundly in the same way that all American society is changing," says Historian Fehrenbach. "Texans are beginning to earn a living more in the fashion of other Americans." The state must diversify its economy even more than it already has. Texas may ultimately be redeemed by the kind of people it has always attracted. The dilemma, in part, is how to preserve the old atmosphere of entrepreneurial daring and adventure, while spending the money needed to educate the young for a new world in a new century. The Texan's instinct prefers action to thought, which may explain why the state ranks 46th in the nation in Scholastic Aptitude Test scores.

The bust in oil prices will pass in time like the seven-year drought of the '50s. But for all the usual Texas exuberance, one hears sometimes an elegiac note. Ranches are being broken up into "ranchettes," absurd little parcels of land in the middle of nowhere. The owner thereby becomes a small parody of the land-holder, the cattle baron. Some ranchers are turning their land over to "exotic game safaris," importing African animals (gazelles or eland or Cape buffalo) and parading them over the range to be shot, for a handsome price, by city boys dressed up like Jeremiah Johnson.

If Texans are uniquely Texans, there is something in them that is quintessentially American. Other Americans--if they are not simply allergic to the idea of Texas and Texans--feel something like nostalgia for the sense of freedom and action and raw possibility that still blows across the prickly landscape. -- By Lance Morrow. Reported by David S. Jackson/Houston

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With reporting by Joelle Attinger/Boston Lance Morrow., David S. Jackson/Houston